mike maples startups

Living in the Future, Non-Consensus Insights, and Startup Wisdom – Mike Maples, Jr. on Venture Stories, Hosted by Erik Torenberg

Check out the Venture Stories Podcast Page

Key Takeaways

  • The best startup founders live in the future. They notice what’s missing, and build something to fulfill what’s missing for the rest of the world. 
  • The best products make people say, “Where have you been all of my life?”
    • Because of this, early customers are willing to tolerate a half-finished product (or something future you will be embarrassed about) because you’re the only person showing up with something they’re desperate for
  • Successful startups are built around “change events” (AKA technology or adoption inflection points)
  • When it comes to startup ideas, non-consensus insights are critical
  • It’s time to pursue an idea when:
    • No one can talk you out of doing it
    • The pain of regret from not trying > any possible pain experienced from failing

Intro

  • Host – Erik Torenberg (@eriktorenberg)
  • Mike Maples (@m2jr) is a partner at Floodgate and host of the Starting Greatness podcast (Podcast Notes)
    • He’s widely considered to be one of the best technology investors of all time (he’s an early investor in Twitter, Cruise Automation, Chegg, Lyft, Okta, Twitch, and more)

Mike’s New Podcast

  • The premise: “I wanted to have something that was dedicated to that crazy 0-to-1 phase before you have product-market fit before you even know if your idea’s right” – Mike Maples
    • Why? – Too many of the startup journey victor tales are told through the eyes of success, not what it looks like at the beginning 
      • Related: “If you’re a startup founder, Brian Chesky of Airbnb might as well live on Pluto as far as you’re concerned”

The Best Founders Are Obsessed and Live in the Future

  • 🎧 “The best founders I’ve seen are living in the future already. What they’re really doing is seeing the future before other people do, and then what they do is notice what’s missing in that future. Then, they build something to fulfill what’s missing and bring forward the future to the rest of the world by persuading them to join their movement.”Mike Maples
  • Because many low-hanging fruit startup ideas have already been picked, one might think domain expertise matters more than ever, but Mike thinks of it differently: An obsession is necessary
    • Related: “Lots of expertise in a current field can become conventional wisdom, but new expertise in a new field that’s an obsession can become super powerful” – Mike Maples

How a Startup Becomes a Company

  • A startup isn’t a company until it hacks its way through 3 distinct miracles:   
    • 1) The insight hack (insight development)
      • This is the result of living in the future, noticing what’s missing, and coming up with a surprising insight
      • In this way, insight development = getting out of the present
      • You finish insight hacking when you answer “yes” to the question: “Am I ready to start?”
    • 2) The value hack (customer development)
      • Customer development = getting out of the building, and trying to build something unique that people are desperate for
      • You’re done value hacking when you answer “yes” to the question: “Am I ready to grow?”‘
    • 3) Growth hacking (going from 0-1 to 1-X)

The Product Paradox

  • The dilemma:
    • In the past, Reid Hoffman has said: “If you aren’t embarrassed by your product, then you launched too late”
    • On the other hand, Steve Jobs‘ product philosophy goes along the lines of: “Only launch when it’s absolutely perfect”
  • Your stance on the above depends on which market you’re in
    • “But for me, the more typical success patterns align with what Reid’s saying” – Mike Maples
  • 🎧 Here’s why:
    • The best products make people say, “Where have you been all of my life?”
      • Because of this, early customers are willing to tolerate a half-finished product (or one that future you will be embarrassed about) because you’re the only person showing up with something they’re desperate for

Find the Change Event

  • “Still waters are bad for startups. Startups win in messy, chaotic, wave-filled current driven waters. That requires a change event bigger than the startup itself.” – Mike Maples
  • There are two types of change events:
    • Technology inflections
      • For example, around the time Mike invested in Lyft, GPS locators in cell phones had just gotten good enough for ride-sharing
    • Adoption inflections
      • Also around the time of Mike’s Lyft investment, it had gotten to a point where enough people now had smartphones that you could count anyone who wanted to drive/ride being able to do so

Work Through the Idea Maze

  • “The thing that I like to assume is every startup idea’s been tried… So, the question is not, Has my idea been tried before? The question is, Is it the right time for my idea to happen?”Mike Maples
  • One thing Mike suggests is “working your way through the idea maze”:
    • Make an honest attempt to look at every experiment with your product idea that’s ever been tried and ask:
      • What were the assumptions?
      • Why did it fail?
      • Why are my assumptions different?
      • How is the world different in a way that may change the outcome?

The Importance of Non-Consensus Ideas

  • The more consensus an idea is, the more likely it’s:
    • A) Either been tried and failed because it wasn’t a good idea
    • B) Something that an incumbent’s already doing
  • Most non-consensus ideas are disliked, but that’s okay. Try to find the small number of people who value your advantage, and believe the secret you believe, and then start a movement.
    • “What you’re trying to do is find a secret, and then find early customers and investors who are in on that secret with you”Mike Maples

Startup Artistry

  • “Startup teams, starting with the founder, are artists more than they are business people”Mike Maples
    • Good artists, like good startup teams, can sense things the rest of the world can’t see
    • Another commonality: Both can move people to act in ways that aren’t logical

Can you predict product-market fit as an investor?

  • Not really, but here’s how Mike thinks about it:
    • It’s more about hoping the founder is a little bit like Picasso – you fund them without knowing what they’re going to paint, all the while believing in their artistic vision
      • “If you believe you’re backing a valid artist with a unique insight, a lot of the time, they’ll surprise you with what you come up with” Mike Maples

A Framework For Picking Co-Founders

  • “When you’re starting a startup, you’re going to war together. You gotta know you want to be in the fox hole with this person. You GOTTA know it. Because it’s impossible enough as it is. A lot of these startups fail because the founders can’t see eye to eye on what has to happen.” Mike Maples

How do you know when it’s time to double down on an idea?

  • When no one can talk you out of doing it
    • “And if there’s anyone reasonable who can talk you out of it, you’re probably not ready to do it” – Mike Maples
  • Or, when the pain of regret from not trying > any possible pain experienced from failing

Not All-In? Avoid

  • “The main risk that I don’t want to take [as an investor] is risk that suggests the founders aren’t all in” – Mike Maples
    • One sign of such: When the founders keep their steady jobs while working on their startup on the side
    • “I want to fund startups where we’re going to be in the fox hole, go to war together, and show the world that our crazy idea is the right kind of crazy… I like people who think, ‘If our insight turns out to be right, this could be my life’s work.'” 

Ponder This

  • 🎧 “I’m a big believer that we’re looking for these exponential change events. So, I like ideas where you can light a forest fire with just a match. I think that on some level, the true measure of the disruptive power of an idea is the degree to which it can make change without throwing money at it.”Mike Maples

The Law of Startups

  • “Fundamentally, a startup is all about harnessing exponential change to create a unique and novel value proposition people are desperate for, that changes their point of view, and grows at hyper-warp speed, all done by people who live in the future. This has been remarkably true for remarkably long.” – Mike Maples

Quotes from Mike to Ponder

  • “The thing I’ve learned about startups is everybody wants the huge upside, but most people really don’t want to take the risk involved in getting that upside” 
  • “The best startups are going to happen even if they can’t raise the money” 
  • “The very best startups quickly are able to raise money at will from whoever they want to raise it from”
  • “The best investors I’ve known are as interested in the intellectual content of what it takes to be a great investor as product people are in building a great product”
Venture Stories : , , , , ,

More Notes on these topics